You “Built” It, So Don’t Lose It! Estate Tax Laws to Change Dramatically on December 31, 2012

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At the end of 2010, Congress passed, and President Obama signed into law, significant changes in the estate, gift and generation-skipping transfer (“GST”) tax regime. The 2010 tax legislation extended the so-called “Bush Tax Cuts,” but only temporarily through 2012. Beginning January 1, 2013, these tax cuts will expire and the Internal Revenue Code will revert to its 2001 status, unless there is further legislative action to make the 2010 tax changes permanent. Absent such legislation, on January 1, 2013 the gift and estate tax exemptions are both scheduled to decrease to $1,000,000 from $5,000,000, and the maximum gift and estate tax rates will increase from 35 percent to 55 percent.

Clients should consider whether and how best to take advantage of the 2010 tax legislation (lock in the $5,000,000 gift exemption before it is lost — use it before you lose it — and not wait until 2013 when it may be too late. This Client Tax Alert discusses strategies that a client can embrace to lock in the use of their $5,000,000 gift exemption before it is lost. Depending upon your financial circumstances, the nature of your assets and your intended beneficiaries, one or more of the techniques listed below may be an appropriate way to utilize this expiring gifting opportunity.

Please see full alert below for more information.

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Topics:  Barack Obama, Dynasty Annuities, Generation-Skipping Transfer, Gift-Tax Exemption, Grantor Retained Annuity Trust, Qualified Personal Residence Trust, Spousal Access Trust, Tax Relief Act of 2010, Year-End Planning, Year-End Tax Planning

Published In: Tax Updates, Wills, Trusts, & Estate Planning Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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